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Media General investor seeks board seats

Aside from the fact its one of the biggest dogs in my portfolio, Media General (MEG/NYSE) is a pretty boring company. By that I mean it's not the stuff of headlines -- even though most of its business consists of newspapers.

But you might have seen the story the other day that Harbinger Capital Partners has bought a bunch of Media General stock and wants three seats on the company's board. (The hedge fund also wants four seats on The New York Times, a company I don't own stock in.) From the linked Bloomberg report:

Media General, owner of the Tampa Tribune and 23 television stations, has fallen 51 percent in past year and New York Times is down 36 percent as newspaper companies lose advertisers to the Internet. The losses have been extended by a U.S. economic slowdown and a housing slump that has bitten into classifieds.

More:

Harbinger, a hedge fund run by Philip Falcone, nominated Eugene Davis, chairman of Pirinate Consulting Group, Jack Liebau, president of Liebau Asset Management, and media investor Daniel Sullivan to Media General's nine-person board, according to a regulatory filing today.

Mario Gabelli, through various of his entities, is the biggest Media General shareholder. I read his thoughts in the annual Barron's Roundtables, but don't follow him closely (you can't follow everyone, you know).

Yet it's worth noting his -- so far -- sympathetic feelings toward Harbinger's demands:

Gabelli hasn't decided whether to back Harbinger's entire slate of nominees to replace directors elected by common shareholders, he said today in an interview. He did say he supports Liebau. The board is chaired by John Stewart Bryan III, a member of the controlling family.

It's time for a change,'' said Gabelli, whose Gamco Investors Inc. owned a 20.9 percent stake in Media General in November. "We're not sure how we'll vote on this proposal -- we might abstain. But we do think change would be good here.''

My feeling now is that I'll follow Gabelli here -- in that I certainly won't just blindly vote with management. This is a case of the dual-class share structure making it virtually impossible to make Media General's controlling family do anything they don't want to do. So I won't get my hopes up.
           

Malone-Diller dance heats up

I posted about the goings-on between John Malone and Barry Diller sometime back. Things were pretty subdued at that time. Now they've heated up over the past couple of days:

Malone's Liberty Media Corp., which holds a 30 percent of IAC's shares and 62 percent of its voting power, asked a court to let it oust Diller and six directors from IAC's board, according to a complaint filed yesterday in Wilmington, Delaware. Liberty, owner of the QVC and Starz channels, wants to name three directors to IAC's board to fill the vacancies.

I'll point out for any new readers that I purchased Liberty Media, then the company listed two tracking stocks -- Liberty Capital (LCAPA/NASDAQ) and Liberty Interactive (LINTA/NASDAQ). I hold both and consider them to be one holding in my portfolio.

Walter Schloss: The Real Thing

Forbes is running a great profile of 91-year-old Walter Schloss, who worked for Benjamin Graham along with Warren Buffett. (Tip of the cap to Paul Kedrosky, who's weekly reading roundup article for TheStreet.com first brought this article to my attention.)

Chances are you know who Schloss is. If so, you'll enjoy this article. If not, be sure to read it -- this qualifies as "must-reading" -- and print it out and keep it for future reference.

Here's a snippet:

Schloss has a laid-back approach that fast-money traders couldn't comprehend. He has never owned a computer and gets his prices from the morning newspaper. A lot of his financial data come from company reports delivered to him by mail, or from hand-me-down copies of Value Line, the stock information service.

He loves the game. Although he stopped running others' money in 2003--by his account, he averaged a 16% total return after fees during five decades as a stand-alone investment manager, versus 10% for the S&P 500--Schloss today oversees his own multimillion-dollar portfolio with the zeal of a guy a third his age. In a day of computer models that purport to quantify that hideous and mysterious force called risk, listening to Schloss talk of his simple, homespun investing methods is a tonic.

One surprising thing in the article is that Schloss made money shorting Yahoo! and Amazon in 2000. I'm surprised because I read an interview with him some years back where he more or less said shorting was a game not for him. Schloss said he'd shorted some overvalued stocks earlier in his career -- successfully as I recall -- but found he just wasn't cut out for it.

My hunch is that he found the absurd Internet bubble provided some shorting candidates too good to pass up.

Simply a great, great article. Schloss has kept a very low profile over the years, so hats off to Forbes for getting him to sit down and talk. And, yet again, here's another top-notch value legend with humility and dignity. The real thing.

Barron's Cover Story

This week's Barron's cover feature focuses on 10 stocks it calls bargains. Among them is CBS (CBS/NYSE), which I own:

Big media stocks are out of favor on Wall Street as investors worry about a slowdown in advertising spending and an ongoing shift in ad dollars to the Internet from traditional media. With its TV, radio and outdoor businesses, CBS is as old-media as they come. The company also is well managed and its stock looks like a bargain at 24, down from a summer high of 35. It trades for just 12 times projected 2008 earnings of $2 a share. CBS is one of the media sector's best dividend plays with a yield of 4.2%. The secure dividend, now $1 annually, is likely to continue to rise. CBS may be a slow-growth story, but it probably trades at a marked discount to the sum of its parts, which could be worth at least $35 a share. CBS's 84-year-old chairman, Sumner Redstone, is eager to reward shareholders.

I'll add that Les Moonves, who runs CBS on a daily basis, is a driving force here. He loves the idea of taking a "boring, old media company" and rewarding shareholders. It's a challenge, and as Barron's points out, the stock is down since last summer.

But that dividend feels especially good in this environment. I remain a holder.

How VW revived Bentley

Matthew Lynn writes a fine piece in The Spectator about Volkswagon's decade-old success in reviving British-made Bentley:

If the British imagine that they can’t do manufacturing any more, then Bentley disproves it. The cars are all made at the listed Crewe factory, along a production line that is both spotless and modern. Its managers have the advantage of being able to tap into all the engineering expertise of the VW group — which includes Audi and Bugatti, as well as the mass-market Skoda and Volkswagen itself, and which may soon be owned by Porsche.

Another interesting bit from earlier in the article:

Bentley has always been one of the most evocative of automotive brands. The business was founded by Walter Owen Bentley, generally known as W.O., soon after he was demobbed from the army at the end of the first world war. It was one of dozens of car manufacturers founded at the time. But while competitors such as Herbert Austin and William Morris were interested in the mass market, much like Henry Ford in America, Bentley was primarily interested in power and grace. By 1924, a Bentley had already won the punishing 24-hour race at Le Mans, and over the next few years his stable of champagne-drinking, high-living racing drivers known as the Bentley Boys were the toast of society. By the end of the decade his marque was among the most celebrated in the fledging motor industry.

I've never been what you'd call a "car guy" -- but I've always thought Bentleys were wonderful and it's good seeing the brand is surviving. And even thriving.

Whitman, Eveillard . . . and Velauthapillai

Among the better value blogs out there is Can Turtles Fly?, authored by Sivaram Velauthapillai in Toronto, Canada. Sivaram considers himself a "newbie" (his word) at investing and writes of his experiences picking stocks.

This post of his links to an interview with Marty Whitman and Jean-Marie Eveillard, with Sivaram's comments thrown in. It's great stuff and well worth checking out.

In fact, if you're attracted to the value investing approach in general and enjoy the challenge of picking stocks in particular, chances are you'll like Can Turtles Fly? -- and want to make it a regular read.

Murdoch: WSJ.com won't go free

You've probably seen the reports on the Web and elsewhere that Rupert Murdoch says The Wall Street Journal will continue charging for full access to WSJ.com:

Murdoch was quoted by the Journal as saying that WSJ.com would "greatly expand and improve" the portion of the site that is available to non-paying subscribers, but that there will still be a "strong offering" for paying subscribers. "The really special things will still be a subscription service, and, sorry to tell you, probably more expensive," the Journal quoted Murdoch as saying.

As a paying subscriber to WSJ.com since 1997, I'd of course like to see it become free. But I'm not really surprised Murdoch will continue charging for it, at least in some form.

The WSJ.com has been greatly successful in charging for its content, and giving that up makes no sense. The only way it could have made sense would be if Murdoch was willing to give up the bucks in return for being more successful in whatever he's planning with Dow Jones, his new Fox Business Network and other assets around the globe.

He's crunched the numbers and, apparently, going free is the wrong way to go.

Myself, I think WSJ.com should either be totally free or totally subscription-based. And a single price for yearly subscriptions. No tiered pricing, that's for sure.

Whatever, this means Barron's Online will remain a subscription site. And ditto the Financial Times' FT.com -- reports are that FT.com has been growing, but concerned that a free WSJ.com would force them to stop charging as well. Pearson executives can put that worry away.

GM's Lutz on longer-term success

If Rick Wagoner's efforts to turnaround General Motors (GM/NYSE) eventually succeed, one of the biggest contributors will be the bringing of Bob Lutz out of retirement.

The Wall Street Journal runs yet another top-notch piece on GM. This one by John D. Stoll:

Mr. Lutz, who joined GM in 2001 after a long career in the auto industry, said GM's stock does not get credit for the amount of research and development the company is doing in several areas that have yet to take off in the global auto industry. For instance, the company is running hard to develop extended-range electric cars by late 2010, and hoping to some day lead the charge in selling mass-marketed hydrogen vehicles. While GM is making big financial bets in these areas, the benefits are yet to flow to the bottom line.

Ontario Teachers' CEO: BCE takeover "proceeding"

Bloomberg reports Jim Leech saying the Ontario Teachers' Pension Plan is pressing ahead with its takeover of BCE (BCE/NYSE). Leech is CEO of the plan:

Speculation has intensified that banks helping to fund the purchase may back out and make the transaction the latest in a series of failed LBOs. Buyouts of U.S. companies including SLM Corp. and Harman International Industries Inc. collapsed after buyers pulled their offers, citing changes in credit markets.

"The intrigue around Bell never seems to end,'' said Leech, who added he's getting calls almost daily from investors asking about the financing. "I look forward to the day when Bell is out of the public eye.''           

Both BCE and Ontario Teachers expect the deal to close during the second quarter. BCE shareholders approved the transaction last September.

Google to gobble up NYT?

I'll file this under "interesting" -- in that I don't own either Google or The New York Times. But John Ellis consistently pens interesting pieces (even though he doesn't write columns nearly as often as in the past).

And this is another one.